Founder-CEO Compensation and Selection into Venture Capital-Backed Entrepreneurship

• 成果类型: Article
• 署名作者: Ewens, Michael; Nanda, Ramana; Stanton, Christopher
• 署名单位: Columbia University; Imperial College London; Harvard University
• 刊物名称: JOURNAL OF FINANCE
• ISSN/ISSBN: 0022-1082
• DOI: 10.1111/jofi.13383
• 发表日期: 2024
• 关键词: Experimentation

摘要

We show theoretically that a critical determinant of the attractiveness of venture capital (VC)-backed entrepreneurship for high-earning potential founders is the expected time to develop a startup's initial product. This is because founder-CEOs' cash compensation increases substantially after product development, alleviating the nondiversifiable risk that founders face at startup birth. Consistent with the model's predictions of where the supply of entrepreneurial talent is likely to be most constrained, we find that technological shocks differentially altering the expected time to product across industries can explain changes in both the rate of entry and characteristics of individuals selecting into VC-backed entrepreneurship.